Appellant Galarneau leased property to Interstate Companies. His wife also leased property to Interstate Companies. In 2004, the Joint Airport Zoning Board adopted a new ordinance for an airport runway. Pursuant to the ordinance, Safety Zone A when read restrictively, did not permit any structures to be near the new runway. The appellant’s buildings were located in Safety Zone B but prior to the ordinance their property had been located in a less restrictive Safety Zone C. Safety Zone B had restrictions on building height, as well as other restrictions on building locations.
In 2005, appellants wanted to build a hotel but the application was denied because it violated the height restrictions imposed by the ordinance affecting Safety Zone B. The District Court granted summary judgment in favor of the City and Airport Commission on a claim of regulatory taking and inverse condemnation. On appeal, appellants asserted that summary judgment in favor of the City was incorrect. Appellants asserted that the airstrip decreased their property value by 50%. The court noted that the Minnesota state constitution provides that “[p]rivate property shall not be taken, destroyed or damaged for public use without just compensation therefor, first paid or secured.” Further, the Court noted that although the Penn Central three-part test “provides the basic framework for analysis” to determine whether the regulation effects a taking, the Minnesota constitution provides more protection because it requires compensation when property is “damaged” or “destroyed,” as well as “taken,” and thus “where land use regulations, such as the airport zoning ordinance here, are designed to benefit a specific public or governmental enterprise, there must be compensation to landowners whose property has suffered a substantial and measureable decline in market value as a result of the regulations.”
The Court determined that the appellants raised issues about investment backed expectations which changed when the new ordinance came into effect in 2004. As such, there were issues of material fact as to whether the ordinance resulted in a substantial decrease in market value and summary judgment is therefore precluded. The appellants also asserted that there was a taking because of the deprivation of enjoyment of their property. The district court determined that the appellants failed to show a direct and substantial invasion of their property rights and further that the loss of enjoyment affected the market value of their property. Here, the court disagreed with the district court because appellants produced a market appraisal demonstrating the decrease in value. Summary judgment was not appropriate on the inverse condemnation claim. The case was reversed and remanded.
Interstate Companies, Inc. v. City of Bloomington, 790 N.W.2d 409 (Minn.App. 11/9/2010)
The opinion can be accessed here
Read Robert Thomas’s summary of the case on the InverseCondemnation blog
